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U.S. Securities and Exchange Commission Announces New Enforcement Initiatives

14 January 2010

Mayer Brown Legal Update

On January 13, 2010, the Division of Enforcement of the U.S. Securities and Exchange Commission announced a series of new enforcement initiatives designed to encourage greater cooperation from individuals and companies when the Commission pursues investigations and enforcement actions.

As part of the initiatives, the Division of Enforcement is authorizing its staff to use previously unavailable tools that are designed to encourage individuals and companies to report violations and provide the Commission assistance in its investigations. These tools, described in Section 6.2 of the Division of Enforcement’s Enforcement Manual, in the chapter titled “Fostering Cooperation,” include:

Formal written cooperationagreements pursuant to which the Division of Enforcement agrees to recommend to the Commission that a cooperator receive credit for cooperating in investigations or related enforcement actions if the cooperator provides substantial assistance.

Formal written agreements in which the Commission agrees to forego an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and to comply with express prohibitions and undertakings during a period of deferred prosecution.

Formal written agreements in which the Commission agrees not to pursue an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and comply with express undertakings. These would be used in limited circumstances deemed appropriate by the Commission.

The Commission is also streamlining the process for submitting witness immunity requests to the Justice Department for witnesses who can assist in investigations and related enforcement actions.

The importance of the underlying matter in which the individual cooperated.

The societal interest in ensuring the individual is held accountable for his or her misconduct.

The appropriateness of cooperation credit based upon the risk profile of the cooperating individual.

In conjunction with the announcement of the new enforcement initiatives, the Division of Enforcement also announced the creation of five national units dedicated to particular, highly specialized and complex areas of securities law. These five areas are:

Structured and new products, will focus on complex derivatives and financial products, including credit default swaps, collateralized debt obligations, and securitized products.

Foreign corrupt practices, which and will focus on violations of the Foreign Corrupt Practice Act.

Municipal securities and public pensions, which will focus on misconduct in the municipal securities market and in connection with public pension funds. This misconduct includes offering and disclosure fraud, tax or arbitrage-driven fraud, pay-to-play and public corruption violations, public pension accounting and disclosure violations, and valuation and pricing fraud.

The Division also has created a new Office of Market Intelligence that is responsible for the collection, analysis, and monitoring of tips, complaints, and referrals.

If you have any questions about the new enforcement initiatives, please contact the author of this Alert,
, at +1 312 701 7304, or any other member of our Corporate & Securities practice, or
at +1 312 701 7146, or any other member of our Securities Enforcement & Investigations practice.

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe-Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown Mexico, S.C., a sociedad civil formed under the laws of the State of Durango, Mexico; Mayer Brown JSM, a Hong Kong partnership and its associated legal practices in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. Mayer Brown Consulting (Singapore) Pte. Ltd and its subsidiary, which are affiliated with Mayer Brown, provide customs and trade advisory and consultancy services, not legal services.

“Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

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